DEFINED ASSET FUNDS MUNICIPAL INVT TR FD MULTISTATE SER 85, 497, 1995-04-06

DEFINED ASSET FUNDS MUNICIPAL INVT TR FD MULTISTATE SER 85
497, 1995-04-06

Previous: CRC II LIMITED PARTNERSHIP, 15-15D, 1995-04-06

Next: NUVEEN TAX EXEMPT UNIT TRUST SERIES 795, 487, 1995-04-06

Defined
Asset FundsSM

MUNICIPAL INVESTMENT This Defined Fund consists of separate underlying
TRUST FUND Trusts, each of which is a portfolio of
- ------------------------------preselected Bonds issued by or on behalf of the
MULTISTATE SERIES - 85 State for which the Trust is named and political
(UNIT INVESTMENT TRUSTS) subdivisions and public authorities thereof or
CALIFORNIA TRUST (INSURED certain United States territories or possessions.
INTERMEDIATE MATURITIES) The Fund is formed for the purpose of providing
5.08% interest income which in the opinion of counsel
ESTIMATED CURRENT RETURN is, with certain exceptions, exempt from regular
5.16% Federal income taxes and from certain state and
ESTIMATED LONG TERM RETURN local personal income taxes in the State for which
FLORIDA TRUST (INSURED) each Trust is named but may be subject to other
5.38% state and local taxes. In addition, the Bonds
ESTIMATED CURRENT RETURN included in each Trust are insured. This insurance
5.40% guarantees the timely payment of principal and
ESTIMATED LONG TERM RETURN interest on but does not guarantee the market
NEW JERSEY TRUST (INSURED) value of the Bonds or the value of the Units. As a
5.32% result of this insurance, Units of each Trust are
ESTIMATED CURRENT RETURN rated AAA by Standard & Poor's Ratings Group, a
5.35% division of McGraw Hill, Inc. ('Standard &
ESTIMATED LONG TERM RETURN Poor's'). The value of the Units of each Trust
AS OF MARCH 30, 1995 will fluctuate with the value of the Portfolio of
underlying Bonds in the Trust.
Estimated Current Return shows the estimated
annual cash to be received from interest-bearing
Bonds in the Portfolio (net of estimated annual
expenses) divided by the Public Offering Price
(including the maximum sales charge).
Estimated Long Term Return is a measure of the
estimated return over the estimated life of the
Fund. This represents an average of the yields to
maturity (or in certain cases, to an earlier call
date) of the individual Bonds in the Portfolio,
adjusted to reflect the maximum sales charge and
estimated expenses. The average yield for the
Portfolio is derived by weighting each Bond's
yield by its market value and the time remaining
to the call or maturity date, depending on how the
Bond is priced. Unlike Estimated Current Return,
Estimated Long Term Return takes into account
maturities, discounts and premiums of the
underlying Bonds.
No return estimate can be predictive of your
actual return because returns will vary with
purchase price (including sales charges), how long
units are held, changes in Portfolio composition,
changes in interest income and changes in fees and
expenses. Therefore, Estimated Current Return and
Estimated Long Term Return are designed to be
comparative rather than predictive. A yield
calculation which is more comparable to an
individual Bond may be higher or lower than
Estimated Current Return or Estimated Long Term
Return which are more comparable to return
calculations used by other investment products.
Estimated cash flows are available upon request
from the Sponsors at no charge.
Minimum purchase: 1 Unit.

----------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
SPONSORS: REPRESENTATION
Merrill Lynch, TO THE CONTRARY IS A CRIMINAL OFFENSE.
Pierce, Fenner & Smith Incorporated INQUIRIES SHOULD BE DIRECTED TO THE
Smith Barney Inc. TRUSTEE AT 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS PART A DATED MARCH 31, 1995.
Prudential Securities Incorporated READ AND RETAIN THIS PROSPECTUS FOR
Dean Witter Reynolds Inc. FUTURE REFERENCE.

<PAGE>
- ------------------------------------------------------------------------------

DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts with over $95 billion sponsored since 1971. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra features: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
- --------------------------------------------------------------------------------
CONTENTS

Investment Summary.......................................... A-3
Tax-Free vs. Taxable Income................................. A-5
Underwriting Account........................................ A-7
Fee Table................................................... A-8
Report of Independent Accountants........................... A-9
Statements of Condition..................................... A-10
Portfolios.................................................. A-11
State Disclosure............................................ A-17

A-2

<PAGE>
INVESTMENT SUMMARY AS OF MARCH 30, 1995 (THE BUSINESS DAY PRIOR TO THE INITIAL
DATE OF DEPOSIT)(a)

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
ESTIMATED CURRENT RETURN(b)
(based on Public Offering
Price)--...................... 5.08% 5.38% 5.32%
ESTIMATED LONG TERM RETURN(b)
(based on Public Offering
Price)--...................... 5.16% 5.40% 5.35%
PUBLIC OFFERING PRICE PER UNIT
(including a 4.00%, 4.50% and
4.50% sales charge for the
California Trust, Florida
Trust and New Jersey Trust,
respectively).................$ 1,026.71(c)$ 1,002.09(c)$ 1,022.15(c)
FACE AMOUNT OF BONDS............$ 4,000,000 $ 3,250,000 $ 3,250,000
INITIAL NUMBER OF UNITS(d)...... 4,000 3,250 3,250
FRACTIONAL UNDIVIDED INTEREST IN
TRUST REPRESENTED BY EACH
UNIT.......................... 1/4,000th 1/3,250th 1/3,250th
MONTHLY INCOME DISTRIBUTIONS
First distribution to be paid
on the 25th of July, June
and June 1995 to Holders of
record on the 10th of July,
June and June 1995,
respectively................$ 5.23 $ 1.59 $ 1.59
Calculation of second and
following distributions:
Estimated net annual interest
rate per Unit times $1,000$ 52.20 $ 53.88 $ 54.36
Divided by 12.................$ 4.35 $ 4.49 $ 4.53
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER UNIT(e)
(based on bid side
evaluation)...................$ 981.64(c)$ 953.00(c)$ 972.06(c)
REDEMPTION PRICE PER UNIT LESS
THAN:
Public Offering Price by....$ 45.07 $ 49.09 $ 50.09
Sponsors' Initial Repurchase
Price by....................$ 4.00 $ 4.00 $ 4.10
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offer side
evaluation of Bonds.........$ 3,942,568.00 $ 3,110,250.00 $ 3,172,513.00
-------------- -------------- --------------
Divided by Number of
Units.....................$ 985.64 $ 957.00 $ 976.16
Plus sales charge of 4.00%,
4.50% and 4.50% of Public
Offering Price (4.167%,
4.712% and 4.712% of net
amount invested) for the
California Trust, Florida
Trust and the New Jersey
Trust, respectively(f).... 41.07 45.09 45.99
-------------- -------------- --------------
Public Offering Price per
Unit......................$ 1,026.71 $ 1,002.09 $ 1,022.15
Plus accrued interest(g).... 1.01 1.04 1.05
-------------- -------------- --------------
Total.....................$ 1,027.72 $ 1,003.13 $ 1,023.20
-------------- -------------- --------------
-------------- -------------- --------------
CALCULATION OF ESTIMATED NET
ANNUAL INTEREST RATE PER UNIT
(based on face amount of
$1,000 per Unit)
Annual interest rate per
Unit........................ 5.425% 5.615% 5.669%
Less estimated annual
expenses per Unit
expressed as a
percentage................ .205% .227% .233%
-------------- -------------- --------------
Estimated net annual
interest rate per
Unit.................... 5.220% 5.388% 5.436%
-------------- -------------- --------------
-------------- -------------- --------------
DAILY RATE AT WHICH ESTIMATED
NET INTEREST ACCRUES PER
UNIT.......................... .0145% .0149% .0151%
SPONSORS' PROFIT (LOSS) ON
DEPOSIT.......................$ 38,114.00 $ 40,575.00 $ 45,575.50
TRUSTEE'S ANNUAL FEE AND
EXPENSES........................$ 2.05(h)$ 2.27(h)$ 2.33(h)
Per Unit commencing March,
1995.

- ------------------
(a) The Indentures were signed and the initial deposits were made on the date
of this Prospectus.
(b) These figures will vary with purchase price including sales charge,
changes in the net interest income and the redemptions, sale, or other
disposition of Bonds in the Portfolio.
(c) Plus accrued interest.
(d) The Sponsors may create additional Units during the offering period of
the Fund.
(e) During the initial offering period, the Sponsors intend to offer to
purchase Units at prices based on the offer side value of the underlying Bonds.
Thereafter, the Sponsors intend to maintain such a market based on the bid side
value of the underlying Bonds which will be equal to the Redemption Price. (See
How To Sell Units in Part B).
(f) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units; the secondary market sales charge will also vary depending on the
maturities of the underlying Bonds (see Appendix C). Any resulting reduction in
the Public Offering Price will increase the effective current and long term
returns on a Unit.
(g) Figure shown represents interest accrued on underlying Bonds from the
Initial Date of Deposit to expected date of settlement (normally five business
days after purchase) for Units purchased on Initial Date of Deposit (see How To
Buy Units in Part B).
(h) In the event that any Bonds have a delayed delivery, the Trustee's Annual
Fee and Expenses will be reduced over a period in the amount of interest that
would have accrued on the Bonds between the date of settlement for the Units and
the actual date of delivery of the Bonds. The Trustee will be reimbursed for
this reduction (see Income, Distributions and Reinvestment--Income in Part B).

A-3

<PAGE>
INVESTMENT SUMMARY AS OF MARCH 30, 1995 (CONTINUED)

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
------------- ------------- -------------
NUMBER OF ISSUES IN PORTFOLIO-- 7 7 7
NUMBER OF ISSUES BY SOURCE OF
REVENUE(a):
Special Tax-- 2 3 --
Municipal Water/Sewer Utilities-- 1 2 --
General Obligation-- 1 -- 1
Hospitals/Healthcare Facilities-- 2 -- 2
Industrial Development Revenue-- -- -- 1
State/Local Government Supported-- -- -- 1
State/Local Municipal Electric
Utilities-- 1 2 --
Universities/Colleges-- -- -- 2
NUMBER OF ISSUES RATED BY
STANDARD &
POOR'S/RATING: -- AAA-- 7(b) 7(b) 7(b)
RANGE OF FIXED FINAL MATURITY DATES
OF BONDS......................... 2003-2007 2015-2027 2013-2025
TYPE OF ISSUE EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO:
General Obligation Issues........ 15% -- 6%
Issues Payable from Income of
Specific Project or
Authority...................... 85% 100% 94%
Bonds Issued at an 'Original
Issue Discount'(c)............. 60% 100% 100%
Bonds Insured by certain
Insurance Companies:(d)
AMBAC.......................... 15% 15% 32%
Financial Guaranty............. 45% 54% 22%
MBIA........................... 40% 31% 46%
CONCENTRATIONS(a) EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO(e):
Hospital/Healthcare Facility... 30% -- 31%
Special Tax.................... 25% 46% --
Universities/Colleges.......... -- -- 33%
State/Local Municipal Electric
Utilities...................... -- 31% --
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Bonds
with offer side
evaluation: over
par-- 40% 54% 54%
at par-- -- -- 15%
at a discount from par-- 60% 46% 31%
PERCENTAGE OF PORTFOLIO ACQUIRED
FROM UNDERWRITING SYNDICATE IN
WHICH CERTAIN SPONSORS
PARTICIPATED AS SOLE UNDERWRITER,
MANAGING UNDERWRITER OR MEMBER... -- -- --
PERCENTAGE OF PORTFOLIOS SUBJECT TO
OPTIONAL REDEMPTIONS BUT NOT
PRIOR TO 2002 (AT PRICES
INITIALLY AT LEAST 100% OF
PAR)(f).......................... 75% 100% 100%

- ------------------
(a) See Risk Factors in Part B for a brief summary of certain investment
risks relating to certain of these issues.
(b) All of the Bonds in this Trust are insured as to scheduled payments of
principal and interest as a result of which the Units of the Trust are rated AAA
by Standard & Poor's (See Appendix A to Part B).
(c) See Taxes in Part B.
(d) See Risk Factors--Bonds Backed by Letters of Credit or Insurance in Part
B.
(e) A Trust is considered to be 'concentrated' in these categories when they
constitute 25% or more of the aggregate face amount of the Portfolio.
(f) See Footnote (2) to Portfolios.

A-4

<PAGE>
Defined
Asset Funds

INVESTOR'S GUIDE
MUNICIPAL INVESTMENT MUNICIPAL INVESTMENT TRUST FUND
TRUST FUND Our defined portfolios of municipal bonds offer
- ------------------------------investors a simple and convenient way to earn
Multistate Series monthly income tax-free. And by purchasing
municipal Defined Funds, investors not only avoid
the problem of selecting municipal bonds by
themselves, but also gain the advantage of
diversification by investing in bonds of several
different issuers. Spreading your investment among
different securities and issuers reduces your
risk, but does not eliminate it.
MONTHLY TAX-FREE INTEREST INCOME
Each Trust pays monthly income, even though the
underlying bonds pay interest semi-annually. This
income is generally 100% exempt under existing
laws from regular federal income tax and from
certain state and local personal income taxes in
the State for which the Trust is named. Any gain
on disposition of the underlying bonds will be
subject to tax.
REINVESTMENT OPTION
You can elect to automatically reinvest your
distributions into a separate portfolio of
federally tax-exempt bonds. Reinvesting helps to
compound your income tax-free. Income from the
reinvestment program may be subject to state and
local taxes.
A-RATED INVESTMENT QUALITY
Each bond in the Fund has been selected by
investment professionals among available bonds
rated A or better by at least one national rating
organization or has, in the opinion of Defined
Funds research analysts, comparable credit
characteristics. Bonds with these 'investment
grade' ratings are judged to have a strong
capacity to pay interest and repay principal. In
addition, units of any insured Fund are rated AAA
by Standard & Poor's.
PROFESSIONAL SELECTION AND SUPERVISION
Each Trust contains a variety of securities
selected by experienced buyers and market
analysts. The Trusts are not actively managed.
However, each portfolio is regularly reviewed and
a security can be sold if, in the opinion of
Defined Funds analysts and buyers, retaining it
could be detrimental to investors' interests.
A LIQUID INVESTMENT
Although not legally required to do so, the
Sponsors have maintained a secondary market for
Defined Asset Funds for over 20 years. You can
cash in your units at any time. Your price is
based on the market value of the bonds in the
Fund's portfolio at that time as determined by an
independent evaluator. Or, you can exchange your
investment for another Defined Fund at a reduced
sales charge. There is never a fee for cashing in
your investment.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities
of bonds in the Fund is distributed to investors
periodically.
RISK FACTORS
Unit price fluctuates and is affected by interest
rates as well as the financial condition of the
issuers and insurers of the bonds.

This page may not be distributed unless included in a current prospectus.
Investors should refer to the prospectus for further information.

<PAGE>
TAX-FREE VS. TAXABLE INCOME
A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

FOR CALIFORNIA RESIDENTS

<TABLE><CAPTION>
COMBINED
TAXABLE INCOME 1995* EFFECTIVE
TAX RATE
A TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-39,000 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76
- --------------------------------------------------------------------------------------------------------------------------------
$0-23,350 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76
- --------------------------------------------------------------------------------------------------------------------------------
$39,900-94,250 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
- --------------------------------------------------------------------------------------------------------------------------------
$23,350-56,550 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
- --------------------------------------------------------------------------------------------------------------------------------
$94,250-143,600 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19
- --------------------------------------------------------------------------------------------------------------------------------
$56,550-117,950 37.90 6.44 7.25 8.05 8.86 9.66 10.47 11.27
- --------------------------------------------------------------------------------------------------------------------------------
$143,600-256,500 42.40 6.94 7.81 8.68 9.55 10.42 11.28 12.15
- --------------------------------------------------------------------------------------------------------------------------------
$117,950-256,500 43.04 7.02 7.90 8.78 9.66 10.53 11.41 12.29
- --------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 46.24 7.44 8.37 9.30 10.23 11.16 12.09 13.02
- --------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 46.24 7.44 8.37 9.30 10.23 11.16 12.09 13.02
- --------------------------------------------------------------------------------------------------------------------------------

</TABLE>

TAXABLE INCOME 1995

SINGLE RETURN 7.5% 8%

- ----------------
9.39 10.01
- ----------------
$0-23,350 9.39 10.01
- ----------------
11.48 12.25
- ----------------
$23,350-56,550 11.48 12.25
- ----------------
11.98 12.78
- ----------------
$56,550-117,950 12.08 12.88
- ----------------
13.02 13.89
- ----------------
$117,950-256,500 13.17 14.04
- ----------------
13.95 14.88
- ----------------
OVER $256,500 13.95 14.88
- ----------------

FOR FLORIDA RESIDENTS

TAXABLE INCOME 1995* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-39,000 15.00 4.71 5.29 5.88 6.47 7.06 7.65 8.24
- ------------------------------------------------------------------------------------------------------------------------------
$0-23,350 15.00 4.71 5.29 5.88 6.47 7.06 7.65 8.24
- ------------------------------------------------------------------------------------------------------------------------------
$39,000-94,250 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
- ------------------------------------------------------------------------------------------------------------------------------
$23,350-56,550 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
- ------------------------------------------------------------------------------------------------------------------------------
$94,250-143,600 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
- ------------------------------------------------------------------------------------------------------------------------------
$56,550-117,950 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
- ------------------------------------------------------------------------------------------------------------------------------
$143,600-256,500 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
- ------------------------------------------------------------------------------------------------------------------------------
$117,950-256,500 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
- ------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- ------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1995

SINGLE RETURN 7.5% 8%

- ----------------
8.82 9.41
- ----------------
$0-23,350 8.82 9.41
- ----------------
10.42 11.11
- ----------------
$23,350-56,550 10.42 11.11
- ----------------
10.87 11.59
- ----------------
$56,550-117,950 10.87 11.59
- ----------------
11.72 12.50
- ----------------
$117,950-256,500 11.72 12.50
- ----------------
12.42 13.25
- ----------------
OVER $256,500 12.42 13.25
- ----------------

FOR NEW JERSEY RESIDENTS

COMBINED
TAXABLE INCOME 1995* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-39,000 16.81 4.81 5.41 6.01 6.61 7.21 7.81 8.41
- ------------------------------------------------------------------------------------------------------------------------------
$0-23,350 16.81 4.81 5.41 6.01 6.61 7.21 7.81 8.41
- ------------------------------------------------------------------------------------------------------------------------------
$39,000-94,250 32.33 5.91 6.65 7.39 8.13 8.87 9.61 10.34
- ------------------------------------------------------------------------------------------------------------------------------
$23,350-56,550 32.33 5.91 6.65 7.39 8.13 8.87 9.61 10.34
- ------------------------------------------------------------------------------------------------------------------------------
$94,250-143,600 35.15 6.17 6.94 7.71 8.48 9.25 10.02 10.79
- ------------------------------------------------------------------------------------------------------------------------------
$56,550-117,950 35.54 6.21 6.98 7.76 8.53 9.31 10.08 10.86
- ------------------------------------------------------------------------------------------------------------------------------
$143,600-256,500 40.21 6.69 7.53 8.36 9.20 10.04 10.87 11.71
- ------------------------------------------------------------------------------------------------------------------------------
$117,950-256,500 40.21 6.69 7.53 8.36 9.20 10.04 10.87 11.71
- ------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 43.57 7.09 7.98 8.86 9.75 10.63 11.52 12.41
- ------------------------------------------------------------------------------------------------------------------------------
OVER $256,500 43.57 7.09 7.98 8.86 9.75 10.63 11.52 12.41
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1995

SINGLE RETURN 7.5% 8%

- ----------------
9.02 9.62
- ----------------
$0-23,350 9.02 9.62
- ----------------
11.08 11.82
- ----------------
$23,350-56,550 11.08 11.82
- ----------------
11.56 12.34
- ----------------
$56,550-117,950 11.64 12.41
- ----------------
12.54 13.38
- ----------------
$117,950-256,500 12.54 13.38
- ----------------
13.29 14.18
- ----------------
OVER $256,500 13.29 14.18
- ----------------

To compare the yield of a taxable security with the yield of a tax-free security
find your taxable income and read across. These tables incorporate projected
1995 Federal and applicable State income tax rates and assume that all income
would otherwise be taxable at the investor's highest tax rates. Yield figures
are for example only.

Legislation has recently been enacted that would increase rates for certain
individuals, thereby increasing the tax-free equivalent yield.

*Based upon net amount subject to Federal income tax after deductions and
exemptions. These tables do not reflect other possible tax factors such as the
alternative minimum tax, personal exemptions, the phase out of exemptions,
itemized deductions and the possible partial disallowance of deductions.
Consequently, holders are urged to consult their own tax advisers in this
regard.

A-5
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Municipal Fund
Accumulation Program, Inc. and a current Prospectus.
My name (please
print) ________________________________________________________________________
My address (please print):
Street and Apt.
No. ___________________________________________________________________________
City, State, Zip
Code __________________________________________________________________________
This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
12345678

A-6
<PAGE>

BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK, N.A. UNITED STATES
UNIT TRUST DEPARTMENT
BOX 2051
NEW YORK, NY 10081

- --------------------------------------------------------------------------------
(Fold along this line.)

- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
INVESTMENT SUMMARY FOR EACH TRUST AS OF MARCH 30, 1995 (CONTINUED)

RECORD DAY
The 10th day of each month
DISTRIBUTION DAY
The 25th day of each month
MINIMUM CAPITAL DISTRIBUTION
No distribution need be made from Capital Account of any Trust if balance
is less than $5.00 per Unit outstanding.
EVALUATION TIME
3:30 P.M. New York Time
ANNUAL PORTFOLIO SUPERVISION FEE(a)
Maximum of $0.35 per $1,000 face amount of underlying Bonds (see Fund
Expenses in Part B)
EVALUATOR'S FEE FOR EACH PORTFOLIO
Minimum of $5.00 (see Fund Expenses in Part B)
MANDATORY TERMINATION DATE
Each Trust must be terminated no later than one year after the maturity
date of the last maturing Bond listed under its Portfolio (see Portfolios).
MINIMUM VALUE OF TRUSTS
Any Trust may be terminated if its value is less than 40% of the Face
Amount of Bonds in the Portfolio on the date of their deposit.

OBJECTIVE--To provide tax-exempt interest income through investment in
fixed-income Bonds issued by or on behalf of the States for which the Trusts are
named and political subdivisions and public authorities thereof or certain
United States territories or possessions. There is no assurance that this
objective will be met because it is subject to the continuing ability of issuers
of the Bonds held by the Trusts to meet their principal and interest
requirements. Furthermore, the market value of the underlying Bonds, and
therefore the value of the Units, will fluctuate with changes in interest rates
and other factors.

RISK FACTORS--Investment in a Trust should be made with an understanding
that the value of the underlying Portfolio may decline with increases in
interest rates. In recent years there have been wide fluctuations in interest
rates and thus in the value of fixed-rate bonds generally. The Sponsors cannot
predict whether these fluctuations will continue in the future. The Bonds are
generally not listed on a national securities exchange. Whether or not the Bonds
are listed, the principal trading market for the Bonds will generally be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Bonds may depend on whether dealers will make a market in the Bonds.
There can be no assurance that a market will be made for any of the Bonds, that
any market for the Bonds will be maintained or of the liquidity of the Bonds in
any markets made. In addition, the Fund may be restricted under the Investment
Company Act of 1940 from selling Bonds to any Sponsor. The price at which the
Bonds may be sold to meet redemptions and the value of Trust Units will be
adversely affected if trading markets for the Bonds are limited or absent.

BOND CALL FEATURES--It is possible that during periods of falling interest
rates, a bond with a coupon higher than current market rates will be prepaid or
'called', at the option of the bond issuer, before its expected maturity. When
bonds are initially callable, the price is usually at a premium to par which
then declines to par over time. Bonds may also be subject to a mandatory sinking
fund or have extraordinary redemption provisions. For example, if the bond's
proceeds are not able to be used as intended the bond may be redeemed. This
redemption and the sinking fund are often at par. Although each of the bonds is
subject to optional refunding or call provisions, we have selected bonds with
call protection. This call protection means that any bond in the Portfolio
generally cannot be called for a number of years and thereafter at a declining
premium over par.

PUBLIC OFFERING PRICE--During the initial offering period and any offering
of additional units the Public Offering Price of the Units of a Trust is based
on the aggregate offer side evaluation of the underlying Bonds in the Trust (the
price at which they could be directly purchased by the public assuming they were
available) divided by the number of Units of the Trust outstanding plus the
applicable sales charge (as set forth on page A-3.)(b) For secondary market
sales charges see Appendix C. Units are offered at the Public Offering Price
computed as of the Evaluation Time for all sales made subsequent to the previous
evaluation, plus cash per unit in the Capital Account not allocated to the
purchase of specific Securities and net interest accrued. The Public Offering
Price on the Initial Date of Deposit and subsequent dates will vary from the
Public Offering Prices set forth on page A-3. (See How To Buy Units; How To Sell
Units in Part B.)

- ---------------
(a) In addition to this amount, the Sponsors may be reimbursed for bookkeeping
or other administrative expenses not exceeding their actual costs, currently at
a maximum annual rate of $0.10 per Unit.
(b) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units (see Appendix C).

A-6

<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF MARCH 30, 1995 (CONTINUED)

MONTHLY DISTRIBUTIONS--Monthly distributions of interest and any principal
or premium received by a Trust will be made in cash on or shortly after the 25th
day of each month to Holders of record of Units of the Trust on the 10th day of
such month commencing with the first distribution on the date indicated above
(see Income, Distributions and Reinvestment--Distributions in Part B).
Alternatively, Holders may elect to have their monthly distributions reinvested
in the Municipal Fund Accumulation Program, Inc. Further information about the
program, including a current prospectus, may be obtained by returning the
enclosed form (see Income, Distributions and Reinvestment--Reinvestment in Part
B).

TAXATION--In the opinion of special counsel to the Sponsors, each Holder of
Units of a Trust will be considered to have received the interest on his pro
rata portion of each Bond in the Trust when interest on the Bond is received by
the Trust. In the opinion of bond counsel rendered on the date of issuance of
the Bond, this interest is exempt under existing law from regular Federal income
tax and exempt from certain state and local personal income taxes of the State
for which the Trust is named (except in certain circumstances depending on the
Holder), but may be subject to other state and local taxes. Any gain on the
disposition of a Holder's pro rata portion of a Bond will be subject to tax.
(See Taxes in Part B.)

MARKET FOR UNITS--The Sponsors, though not obligated to do so, intend to
maintain a secondary market for Units based on the aggregate bid side evaluation
of the underlying Bonds. If this market is not maintained a Holder will be able
to dispose of his Units through redemption at prices also based on the aggregate
bid side evaluation of the underlying Bonds. There is no fee for selling Units.
Market conditions may cause the prices available in the market maintained by the
Sponsors or available upon exercise of redemption rights to be more or less than
the total of the amount paid for Units plus accrued interest. (See How To Buy
Units; How To Sell Units in Part B.)

UNDERWRITING ACCOUNT

The names and addresses of the Underwriters and their several interests in
the Underwriting Account are:

<TABLE>
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated P.O. Box 9051, Princeton, N.J. 08543-9051 48.10%
Smith Barney Inc. 388 Greenwich Street--23rd Floor, New York, N.Y. 10013 9.52
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 23.81
Prudential Securities Incorporated 1 Seaport Plaza, 199 Water Street, New York, N.Y. 10292 7.14
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York, N.Y.
10048 11.43
----------
100.00%
----------
----------
</TABLE>

A-7

<PAGE>
INVESTMENT SUMMARY AS OF MARCH 30, 1995 (CONTINUED)
FEE TABLE

THIS FEE TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS
AND EXPENSES THAT AN INVESTOR IN A TRUST WILL BEAR DIRECTLY OR INDIRECTLY. SEE
HOW TO BUY UNITS AND FUND EXPENSES IN PART B. ALTHOUGH A TRUST IS A UNIT
INVESTMENT TRUST RATHER THAN A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO
PERMIT A COMPARISON OF FEES.

<TABLE><CAPTION>
California Trust
(Intermediate Maturities) Florida and New Jersey Trusts
----------------------------- -----------------------------------
<S> <C> <C>
UNITHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases during the
Initial Offering Period (as a percentage of Public
Offering Price)......................................... 4.00% 4.50%
Maximum Sales Charge Imposed on Purchases during the
Secondary Offering Period (as a percentage of Public
Offering Price)......................................... 4.50% 5.50%
----------------------------- -----------------------------------

ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)

</TABLE>
<TABLE><CAPTION>
CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
------------ ----------- --------------
<S> <C> <C> <C>
Trustee's Fee.......................................................................... .071% .073% .072%
Portfolio Supervision, Bookkeeping and Administrative Fees............................. .046% .047% .046%
Other Operating Expenses............................................................... .091% .118% .121%
------------ ----------- --------------
Total............................................................................... .208% .238% .239%
------------ ----------- --------------
------------ ----------- --------------
</TABLE>

- ------------------
1Based on the mean of the bid and offer side evaluations; these figures may
differ from those set forth as estimated annual expenses per unit expressed as a
percentage on page A-3.

<TABLE><CAPTION>
EXAMPLE
- ------------------------------------------------------------------------------------------------------------------------

An investor would pay the following expenses on a $1,000 investment,
assuming the Trust's estimated operating expense ratio as described in
parentheses below and a 5% annual CUMULATIVE EXPENSES PAID FOR PERIOD OF:
return on the investment throughout the periods:
-----------------------------------------
1 YEAR 3 YEARS 5 YEARS
----------- ------------- -------------
<S> <C> <C> <C>
California Trust (.208%)................................................ $ 42 $ 46 $ 51
Florida Trust (.238%)................................................... 47 52 58
New Jersey Trust (.239%)................................................ 47 52 58
</TABLE>

EXAMPLE
- -----------------------------------------------------------------------------
An investor would pay the following expenses on a $1,000 investment,
assuming the Trust's estimated operating expense ratio as described in
parentheses below and a 5% annual
return on the investment throughout the periods:
<TABLE><CAPTION>

10 YEARS
-------------
<S> <C>
California Trust (.208%)................................................ $ 65
Florida Trust (.238%)................................................... 74
New Jersey Trust (.239%)................................................ 74
</TABLE>

The Example assumes reinvestment of all distributions into additional Units of a
Trust (a reinvestment option different from that offered by this Fund--see
Income, Distributions and Reinvestment--Reinvestment in Part B) and utilizes a
5% annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. Cumulative expenses above reflect both
sales charges and operating expenses on an increasing investment (because the
net annual return is reinvested). In addition to the charges described above, a
Holder selling or redeeming his Units in the secondary market (before a Trust
terminates) will receive a price based on the then-current bid side evaluation
of the underlying bonds. The difference between this bid side evaluation and the
offer side evaluation (the basis for the Public Offering Price), as of the day
before the Initial Date of Deposit, is $4.00 per Unit for the California and
Florida Trusts and $4.10 per Unit for the New Jersey Trust. Of course, this
difference may change over time. The Example should not be considered a
representation of past or future expenses or annual rate of return; the actual
expenses and annual rate of return may be more or less than those assumed for
purposes of the Example.

A-8

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Municipal Investment Trust Fund,
Multistate Series - 85, Defined Asset Funds (California, Florida and New Jersey
Trusts):

We have audited the accompanying statements of condition and the related
portfolios included in the prospectus of the Trusts as of March 31, 1995. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities and the irrevocable letter of credit deposited for
the purchase of securities, as described in the statements of condition, with
the Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the Trusts as of March
31, 1995 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
March 31, 1995

A-9
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 85
DEFINED ASSET FUNDS
STATEMENTS OF CONDITION AS OF INITIAL DATE OF DEPOSIT, MARCH 31, 1995

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
FUND PROPERTY
Investments--Bonds and
Contracts to purchase
Bonds(1)...................$ 3,942,568.00 $ 3,110,250.00 $ 3,172,513.00
Accrued interest to Initial Date
of Deposit on underlying
Bonds......................... 42,507.00 24,479.17 35,561.94
-------------- -------------- --------------
Total...............$ 3,985,075.00 $ 3,134,729.17 $ 3,208,074.94
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITY AND INTEREST OF
HOLDERS
Liability--Advance by Trustee
for accrued interest to
Initial Date of Deposit on
underlying Bonds(2)...........$ 42,507.00 $ 24,479.17 $ 35,561.94
-------------- -------------- --------------
Interest of Holders--
Units of fractional undivided
interest outstanding
(California Trust--4,000;
Florida Trust--3,250;
New Jersey Trust--3,250)
Cost to investors(3).......$ 4,106,848.00 $ 3,256,792.50 $ 3,321,980.50
Gross underwriting
commissions(4)............. (164,280.00) (146,542.50) (149,467.50)
-------------- -------------- --------------
Net amount applicable to
investors.................. 3,942,568.00 3,110,250.00 3,172,513.00
-------------- -------------- --------------
Total...............$ 3,985,075.00 $ 3,134,729.17 $ 3,208,074.94
-------------- -------------- --------------
-------------- -------------- --------------

- ------------------

(1) Aggregate cost to each Trust of the Bonds is based on the offer side
evaluation determined by the Evaluator at the Evaluation Time on the
business day prior to the Initial Date of Deposit as set forth under How To
Buy Units in Part B. The contracts to purchase the Bonds are collateralized
by irrevocable letters of credit which have been issued by Banca Popolare di
Milano--New York Branch in the amount of $9,073,181.42 and deposited with
the Trustee. The amount of letters of credit includes $8,983,806.50 for the
purchase of $9,300,000 face amount of Bonds, plus $89,374.92 for accrued
interest.

(2) Representing, as set forth under How To Buy Units in Part B, a special
distribution by the Trustee to the Sponsors of an amount equal to accrued
interest on the Bonds as of the Initial Date of Deposit.

(3) Aggregate public offering price (exclusive of interest) computed on the
basis of the offer side evaluation of the underlying Bonds as of the
Evaluation Time on the Business Day prior to the Initial Date of Deposit.

(4) Assumes sales charge of 4.00%, 4.50% and 4.50% for the California, Florida
and New Jersey Trusts, respectively, on all Units computed on the basis set
forth under How To Buy Units in Part B.

A-10
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 85
DEFINED ASSET FUNDS
PORTFOLIO OF THE CALIFORNIA TRUST (INSURED INTERMEDIATE MATURITIES)
ON THE INITIAL DATE OF DEPOSIT, MARCH 31, 1995

<TABLE><CAPTION>
OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
BONDS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------- ----------- -------------- ----------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
1. California Statewide Communities Dev. AAA $ 600,000 5.40% 8/15/07 8/15/03 @ 102
Auth., Sutter Hlth. Oblig. Group (MBIA
Ins.)
2. Southern California Pub. Pwr. Auth., AAA 600,000 4.75 7/1/07 7/1/04 @ 102
Mead-Phoenix Proj. Rev. Bonds, 1994
Ser. A (AMBAC Ins.)
3. Natomas Unified Sch. Dist., Sacramento AAA 600,000 5.70 9/1/03 --
Cnty., CA, Gen. Oblig. Bonds, Election
of 1992, Ser. 1995 A (Financial
Guaranty Ins.)
4. Santa Clara Valley Wtr. Dist., Santa AAA 600,000 5.70 2/1/07 2/1/04 @ 102
Clara Cnty., CA, Rfdg. and Imp. Certs.
of Part., Ser. 1994 A (Financial
Guaranty Ins.)
5. City of Fresno, CA, Hlth. Fac. Rev. AAA 600,000 5.40 12/1/07 12/1/03 @ 102
Bonds, Holy Cross Hlth. Sys. Corp.,
Ser. 1993 (MBIA Ins.)
6. Redevelopment Agy. of the City of San AAA 400,000 6.00 8/1/06 --
Jose, CA, Merged Area Redev. Proj.,
Tax Alloc. Bonds, Ser. 1993 (MBIA
Ins.)
7. Poway, CA, Redev. Agy., Paguay Redev. AAA 600,000 5.22 12/15/06 12/15/03 @ 102
Proj., Sub. Tax Alloc. Rfdg. Bonds,
Ser. 1993 (Financial Guaranty Ins.)
--------------
$ 4,000,000
--------------
--------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND BONDS ON INITIAL DATE
REDEMPTIONS (2) TO TRUST (3) OF DEPOSIT (3)
--------------- ------------------ -----------------
1. -- $ 586,728.00 5.650%

2. -- 545,238.00 5.800

3. -- 624,360.00 5.100

4. -- 604,770.00 5.600+

5. -- 586,506.00 5.650

6. -- 421,852.00 5.350

7. 6/15/03 573,114.00 5.750

------------------
$ 3,942,568.00
------------------
------------------

A-11
<PAGE>
- ------------
NOTES

(1) All ratings are by Standard & Poor's. Any rating followed by '*' is subject
to submission and review of final documentation. Any rating followed by a
'p' is provisional and assumes the successful completion of the project
being financed. (See Appendix A to Part B.)

(2) Bonds are first subject to optional redemption (which may be exercised in
whole or in part) on the dates and at the prices indicated under the
Optional Refunding Redemptions column. In subsequent years bonds are
redeemable at declining prices, but typically not below par value. Some
issues may be subject to sinking fund redemption or extraordinary
redemption without premium prior to the dates shown.

(3) Evaluation of Bonds by the Evaluator is made on the basis of current offer
side evaluation. The offer side evaluation is greater than the current bid
side evaluation of the Bonds, which is the basis on which Redemption Price
per Unit is determined (see How To Sell Units in Part B). The aggregate
value based on the bid side evaluation at the Evaluation Time on the
business day prior to the Initial Date of Deposit was $3,926,568.00, which
is $16,000.00 (.40% of the aggregate face amount) lower than the aggregate
Cost of Bonds to Trust based on the offer side evaluation.
Yield to Maturity on the Initial Date of Deposit was computed on the basis
of the offer side evaluation at the Evaluation Time on the business day
prior to the Initial Date of Deposit. Percentages in this column represent
Yield to Maturity on Initial Date of Deposit unless followed by '+' which
indicates yield to an earlier redemption date.

------------------------------------

The Bonds in Portfolio Numbers 2 and 5 have been deposited with the Trustee.
All other Bonds are represented entirely by contracts to purchase such
Bonds, which were entered into by the Sponsors during the period of March
27, 1995 to March 30, 1995. All contracts are expected to be settled by the
initial settlement date for the purchase of Units.

All Bonds have been insured or guaranteed to maturity by the indicated
insurance company (see Risk Factors--Bonds Backed by Letters of Credit or
Insurance in Part B).

+ See Footnote (3).

A-12
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 85
DEFINED ASSET FUNDS
PORTFOLIO OF THE FLORIDA TRUST (INSURED)
ON THE INITIAL DATE OF DEPOSIT, MARCH 31, 1995

<TABLE><CAPTION>
OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
BONDS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------- ----------- -------------- ----------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
1. Florida Muni. Pwr. Agy., Stanton II AAA $ 500,000 4.50% 10/1/27 10/1/03 @ 100
Proj. Rfdg. Rev. Bonds, Ser. 1993
(AMBAC Ins.)
2. Dade Cnty., FL, Prof. Sports Franchise AAA 500,000 6.00 10/1/22 10/1/02 @ 101.5
Fac. Tax Rev. Bonds, Ser. 1992 B
(Financial Guaranty Ins.)
3. Martin Cnty., FL, Consol. Util. Sys. AAA 250,000 6.00 10/1/24 10/1/04 @ 102
Rfdg. and Imp. Rev. Bonds, Ser. 1994
(Financial Guaranty Ins.)
4. Orange Cnty., FL, Sales Tax Rev. Bonds, AAA 500,000 5.375 1/1/24 1/1/03 @ 102
Ser. 1993 B (Financial Guaranty Ins.)
5. City of Clearwater, FL, Imp. Rev. Bonds AAA 500,000 6.00 2/1/25 2/1/03 @ 102
(Muni. Svcs./Pub. Safety and Police
Complex Proj.), Ser. 1995 (MBIA Ins.)
6. Enterprise Comm. Dev. Dist., Osceola AAA 500,000 6.125 5/1/24 5/1/04 @ 101
Cnty., FL, Wtr. and Swr. Rev. Bonds,
Ser. 1994 (MBIA Ins.)
7. Kissimmee, FL, Util. Auth., Elec. Sys. AAA 500,000 5.50 10/1/15 10/1/03 @ 102
Imp. and Rfdg. Rev. Bonds, Ser. 1993
(Financial Guaranty Ins.)
--------------
$ 3,250,000
--------------
--------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND BONDS ON INITIAL DATE
REDEMPTIONS (2) TO TRUST (3) OF DEPOSIT (3)
--------------- ------------------ -----------------
1. 10/1/17 $ 393,295.00 6.000%

2. 10/1/18 503,595.00 5.900+

3. 10/1/15 252,065.00 5.900+

4. 1/1/14 467,085.00 5.850

5. 2/1/22 503,640.00 5.900+

6. 5/1/16 508,425.00 5.900+

7. 10/1/13 482,145.00 5.800

------------------
$ 3,110,250.00
------------------
------------------

A-13
<PAGE>
- ------------
NOTES

(3) Evaluation of Bonds by the Evaluator is made on the basis of current offer
side evaluation. The offer side evaluation is greater than the current bid
side evaluation of the Bonds, which is the basis on which Redemption Price
per Unit is determined (see How To Sell Units in Part B). The aggregate
value based on the bid side evaluation at the Evaluation Time on the
business day prior to the Initial Date of Deposit was $3,097,250.00, which
is $13,000.00 (.40% of the aggregate face amount) lower than the aggregate
Cost of Bonds to Trust based on the offer side evaluation.
Yield to Maturity on the Initial Date of Deposit was computed on the basis
of the offer side evaluation at the Evaluation Time on the business day
prior to the Initial Date of Deposit. Percentages in this column represent
Yield to Maturity on Initial Date of Deposit unless followed by '+' which
indicates yield to an earlier redemption date.

------------------------------------

All Bonds are represented entirely by contracts to purchase such Bonds,
which were entered into by the Sponsors during the period of March 28, 1995
to March 30, 1995. All contracts are expected to be settled by the initial
settlement date for purchase of Units.

All Bonds have been insured or guaranteed to maturity by the indicated
insurance company (see Risk Factors--Bonds Backed by Letters of Credit or
Insurance in Part B).

+ See Footnote (3).

A-14
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 85
DEFINED ASSET FUNDS
PORTFOLIO OF THE NEW JERSEY TRUST (INSURED)
ON THE INITIAL DATE OF DEPOSIT, MARCH 31, 1995

<TABLE><CAPTION>
OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
BONDS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------- ----------- -------------- --------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
1. New Jersey Econ. Dev. Auth. Wtr. Fac. AAA $ 500,000 5.80% 3/1/24 3/1/04 @ 102
Rev. Rfdg. Bonds, Hackensack Wtr. Co.
Proj., 1994 Ser. A (MBIA Ins.)
2. New Jersey State Educl. Fac. Auth. Rev. AAA 500,000 6.00 7/1/24 7/1/04 @ 102
Bonds, New Jersey Inst. of Tech. Iss.,
Ser. 1994 A (MBIA Ins.)
3. New Jersey State Educl. Fac. Auth. Rev. AAA 550,000 5.90 7/1/25 7/1/05 @ 101.5
Bonds, Jersey City State College Iss.,
Ser. 1995 A (AMBAC Ins.)
4. New Jersey Hlth. Care Fac. Fin. Auth. AAA 500,000 5.125 7/1/13 7/1/03 @ 102
Rev. Bonds, Allegany Hlth. Sys. - Our
Lady of Lourdes Med. Ctr. Iss., Ser.
1993 (MBIA Ins.)
5. New Jersey Hlth. Care Fac. Fin. Auth. AAA 500,000 5.875 7/1/24 7/1/04 @ 100
Rev. Bonds, Jersey Shore Med. Ctr.
Oblig. Group Iss., Ser. 1994 (AMBAC
Ins.)
6. The Essex Cnty., NJ, Imp. Auth., Gen. AAA 500,000 5.20 12/1/24 12/1/04 @ 101
Oblig. Lease Rev. Bonds, Ser. 1994
(Gibraltar Bldg. Proj.) (Financial
Guaranty Ins.)
7. Township of Delran, Cnty. of Burlington, AAA 100,000 5.90 1/1/16 1/1/06 @ 100
NJ, Gen. Imp. Bonds, Ser. 1995 100,000 5.90 1/1/17 1/1/06 @ 100
(Financial Guaranty Ins.)
--------------
$ 3,250,000
--------------
--------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND BONDS ON INITIAL DATE
REDEMPTIONS (2) TO TRUST (3) OF DEPOSIT (3)
--------------- ------------------ -----------------
1. -- $ 500,000.00 5.800%

2. 7/1/16 504,010.00 5.900+

3. 7/1/20 552,453.00 5.850+

4. 7/1/09 459,615.00 5.850

5. 7/1/22 500,830.00 5.850+

6. 12/1/15 454,440.00 5.850

7. -- 100,781.00 5.800+
-- 100,384.00 5.850+

------------------
$ 3,172,513.00
------------------
------------------

A-15
<PAGE>
- ------------
NOTES

(3) Evaluation of Bonds by the Evaluator is made on the basis of current offer
side evaluation. The offer side evaluation is greater than the current bid
side evaluation of the Bonds, which is the basis on which Redemption Price
per Unit is determined (see How To Sell Units in Part B). The aggregate
value based on the bid side evaluation at the Evaluation Time on the
business day prior to the Initial Date of Deposit was $3,159,188.00, which
is $13,325.00 (.41% of the aggregate face amount) lower than the aggregate
Cost of Bonds to Trust based on the offer side evaluation.
Yield to Maturity on the Initial Date of Deposit was computed on the basis
of the offer side evaluation at the Evaluation Time on the business day
prior to the Initial Date of Deposit. Percentages in this column represent
Yield to Maturity on Initial Date of Deposit unless followed by '+' which
indicates yield to an earlier redemption date.

------------------------------------

All Bonds are represented entirely by contracts to purchase such Bonds,
which were entered into by the Sponsors during the period of March 23, 1995
to March 30, 1995. All contracts are expected to be settled by the initial
settlement date for purchase of Units.

All Bonds have been insured or guaranteed to maturity by the indicated
insurance company (see Risk Factors--Bonds Backed by Letters of Credit or
Insurance in Part B).

+ See Footnote (3).

A-16
<PAGE>
STATE DISCLOSURE

The following summaries are based on publicly available information which
has not been independently verified by the Sponsors or their legal counsel and
are qualified in their entirety by the more detailed information appearing in
the Information Supplement.

CALIFORNIA RISK FACTORS

The State of California continues to confront budgetary concerns. State
expenditures in recent years have exceeded projected amounts mainly because of
increased health and welfare caseloads, lower property taxes (requiring State
support for certain education expenses), lower than expected federal government
payments for immigration related costs, significant additional costs associated
with the construction and operation of correctional institutions and
extraordinary expenditures related to the January 1994 Los Angeles earthquake
and the recent severe flooding in various parts of the State. Also, in December
1994, Orange County, California and its Investment Pool filed for bankruptcy in
connection with substantial losses experienced by the Pool. The County has since
defaulted on certain of its obligations and substantial budget deficits may be
experienced by the County and other public agencies which participate in the
Pool. The ultimate financial impact of these events upon the County and other
Pool investors and the State of California, generally, or the liquidity or value
of their securities, cannot be predicted.

To balance the budget, the Governor of California has proposed, among other
things, a series of revenue shifts from local government, reliance on increased
federal aid and reductions in state spending. Major adjustments reflected in
recent budgets include a shift in property taxes from cities, counties, special
districts and redevelopment agencies to school and community college districts,
severe reductions in support for health and welfare programs and higher
education, and various other cuts in services, suspensions of tax credits and
payment deferrals.

Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could have
adverse effects on the California economy. Among these are measures that have
established tax, spending or appropriations limits and prohibited the imposition
of certain new taxes, authorized the transfers of tax liabilities and
reallocations of tax receipts among governmental entities and provided for
minimum levels of funding.

Certain bonds in the Trust may be subject to provisions of California law
that could adversely affect payments on those bonds or limit the remedies
available to bondholders. Among these are bonds of health care institutions
which are subject to the strict rules and limits regarding reimbursement
payments of California's Medi-Cal Program for health care services to welfare
beneficiaries, and bonds secured by liens on real property.

General obligation bonds of the State of California are currently rated A1
by Moody's and A by Standard & Poor's.

CALIFORNIA TAXES

In the opinion of O'Melveny & Myers, Los Angeles, California, special
counsel on California tax matters, under existing California law:

The Trust is not an association taxable as a corporation for California tax
purposes. Each investor will be considered the owner of a pro rata portion of
the Trust and will be deemed to receive his pro rata portion of the income
therefrom. To the extent interest on the Bonds is exempt from California
personal income taxes, said interest is similarly exempt from California
personal income taxes in the hands of the investors, except to the extent such
investors are banks or corporations subject to the California franchise tax.
Investors will be subject to California income tax on any gain on the
disposition of all or part of his pro rata portion of a Bond in the Trust. An
investor will be considered to have disposed of all or part of his pro rata
portion of each Bond when he sells or redeems all or some of his Units. An
investor will also be considered to have disposed of all or part of his pro rata
portion of a Bond when all or part of the Bond is sold by the Trust or is
redeemed or paid at maturity. The Bonds and the Units are not taxable under the
California personal property tax law.

A-17
<PAGE>
FLORIDA RISK FACTORS

The financial condition of the State of Florida is affected by various
national, economic, social and environmental policies and conditions.
Additionally, limitations placed by the State's Constitution on the State and
its local governments covering income taxes, ad valorem taxes, bond indebtedness
and other matters, as well as various statutory limitations, may constrain the
revenue-generating capacity of the State and its local governments and,
therefore, the ability of the issuers of the Bonds to satisfy their obligations.

The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local govenments to satisfy the Bonds, are
affected by numerous factors. South Florida is susceptible to international
trade and currency imbalances and to economic problems in Central and South
America due to its geographical location and its involvement with foreign trade,
tourism and investment capital. The central and northern portions of the State,
on the other hand, could be impacted by problems in the agricultural sector,
including crop failures, severe weather conditions or other agriculture-related
problems, particularly with regard to the citrus and sugar industries. The
State's economy also has historically been somewhat dependent on the tourism and
construction industries and is sensitive to trends in those sectors.

General obligation bonds of the State are currently rated Aa by Moody's
Investors Service and AA by Standard & Poor's.

FLORIDA TAXES

In the opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel,
P.A., Miami, Florida, special counsel on Florida tax matters, under
existing Florida law:

1. The Fund will not be subject to income, franchise or other taxes of a
similar nature imposed by the State of Florida or its subdivisions,
agencies or instrumentalities.

2. Because Florida does not impose a personal income tax, non-corporate
investors in Units of the Fund will not be subject to any Florida income
taxes with respect to (i) amounts received by the Fund on the Bonds it
holds; (ii) amounts which are distributed by the Fund to non-corporate
investors in Units of the Fund or (iii) any gain realized on the sale or
redemption of Bonds by the Fund or of a Unit of the Fund by a non-corporate
investor. However, corporations as defined in Chapter 220, Florida Statutes
(1991), which are otherwise subject to Florida income taxation will be
subject to tax on their respective share of any income and gain realized by
the Fund and on any gain realized by a corporate investor on the sale or
redemption of Units of the Fund by the corporate investor.

3. The Units will be subject to Florida estate taxes only if held by
Florida residents, or if held by non-residents deemed to have business
sites in Florida. The Florida estate tax is limited to the amount of the
credit for state death taxes provided for in Section 2011 of the Internal
Revenue Code.

4. Bonds issued by the State of Florida or its political subdivisions
are exempt from Florida intangible personal property taxation under Chapter
199, Florida Statutes (1991), as amended. Bonds issued by the Government of
Puerto Rico or by the Government of Guam, or by their authority, are exempt
by Federal statute from taxes such as the Florida intangible personal
property tax. Thus, the Fund will not be subject to Florida intangible
personal property tax on any Bonds in the Fund issued by the State of
Florida or its political subdivisions, by the Government of Puerto Rico or
by its authority or by the Government of Guam or by its authority. In
addition, the Units of the Fund will not be subject to the Florida
intangible personal property tax if the Fund invests solely in such
Florida, Puerto Rico or Guam debt obligations.

NEW JERSEY RISK FACTORS

New Jersey and certain of its public authorities have in recent years
experienced financial difficulties and pressures to a significant degree.
Employment in manufacturing, wholesale and retail trade and construction have
been in decline although gains have been recorded in the services, government,
financial/insurance/real estate and tranportation/communication/public utilities
sectors. The economic recovery in New Jersey is likely to be slow and uneven
becasue some sectors, like commercial and industrial construction, suffer from
excess capacity, and even in rebounding sectors, employers are expected to be
cautious about hiring.

State appropriations of funds are distributed among a diverse group of
public recipients. In 1994, the largest state aid appropriation was provided for
local elementary and secondary education programs, followed by

A-18
<PAGE>
appropriations for operation of the state government (including the State
Legislature, Judiciary and Executive Office) and other programs including, among
others, correctional facilities and the State Police, higher education and
environmental protection. The effect on these appropriations and other State
funding requirements of Governor Whitman's 1994 personal income tax rate
reduction of 5% cannot yet be evaluated.

The primary method for State financing of capital projects is through the
sale of the general obligation bonds of the State. These bonds are backed by the
full faith and credit of the State. Tax revenues and certain other fees are
pledged to meet the principal and interest payments required to pay the debt
fully. With certain exceptions, no general obligation debt can be issued by the
State without prior voter approval.

General obligation bonds of New Jersey are currently rated Aa1 by Moody's
and AA+ by Standard & Poor's.

NEW JERSEY TAXES

In the opinion of Shanley & Fisher, P.C., Morristown, New Jersey, special
counsel on New Jersey tax matters, under existing New Jersey law:

1. The proposed activities of the Fund will not cause it to be subject to
the New Jersey Corporation Business Tax Act.

2. The income of the Fund will be treated as the income of individuals,
estates and trusts who are the investors in the Fund for purposes of the New
Jersey Gross Income Tax Act, and interest which is exempt from tax under the New
Jersey Gross Income Tax Act when received by the Fund will retain its status as
tax exempt in the hands of such investors. Gains arising from the sale or
redemption by an investor of his Units or from the sale or redemption by the
Fund of any Bond are exempt from taxation under the New Jersey Gross Income Tax
Act, as enacted and construed on the date hereof, to the extent such gains are
attributable to Bonds the interest on which is exempt from tax under the New
Jersey Gross Income Tax Act.

3. Units of the Fund may be subject, in the estates of New Jersey
residents, to taxation under the Transfer Inheritance Tax Law of the State of
New Jersey.

A-19
<PAGE>

DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
DEFINED ASSET FUNDS MUNICIPAL SERIES
MUNICIPAL INVESTMENT TRUST FUND

FURTHER DETAIL REGARDING ANY OF THE INFORMATION PROVIDED IN THE PROSPECTUS MAY
BE OBTAINED
WITHIN FIVE DAYS OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE, THE ADDRESS
AND
TELEPHONE NUMBER OF WHICH ARE SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.

Index

PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 7
How to Sell Units..................................... 9
Income, Distributions and Reinvestment................ 9
Fund Expenses......................................... 10
Taxes................................................. 11
Records and Reports................................... 12
PAGE
---------
Trust Indenture....................................... 12
Miscellaneous......................................... 13
Exchange Option....................................... 14
Supplemental Information.............................. 15
Appendix A--Description of Ratings.................... a-1
Appendix B--Sales Charge Schedules for Defined Asset
Funds Municipal Series................................ b-1
Appendix C--Sales Charge Schedules for Municipal
Investment Trust Fund................................. c-1

FUND DESCRIPTION

BOND PORTFOLIO SELECTION

Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Bonds for the Portfolio after
considering the Fund's investment objective as well as the quality of the Bonds
(all Bonds in the Portfolio are initially rated in the category A or better by
at least one nationally recognized rating organization or have comparable credit
characteristics), the yield and price of the Bonds compared to similar
securities, the maturities of the Bonds and the diversification of the
Portfolio. Only issues meeting these stringent criteria of the Defined Asset
Funds team of dedicated research analysts are included in the Portfolio. No
leverage or borrowing is used nor does the Portfolio contain other kinds of
securities to enhance yield. A summary of the Bonds in the Portfolio appears in
Part A of the Prospectus.

The deposit of the Bonds in the Fund on the initial date of deposit
established a proportionate relationship among the face amounts of the Bonds.
During the 90-day period following the initial date of deposit the Sponsors may
deposit additional Bonds in order to create new Units, maintaining to the extent
possible that original proportionate relationship. Deposits of additional Bonds
subsequent to the 90-day period must generally replicate exactly the
proportionate relationship among the face amounts of the Bonds at the end of the
initial 90-day period.

Yields on bonds depend on many factors including general conditions of the
bond markets, the size of a particular offering and the maturity and quality
rating of the particular issues. Yields can vary among bonds with similar
maturities, coupons and ratings. Ratings represent opinions of the rating
organizations as to the quality of the bonds rated, based on the credit of the
issuer or any guarantor, insurer or other credit provider, but these ratings are
only general standards of quality (see Appendix A).

After the initial date of deposit, the ratings of some Bonds may be reduced
or withdrawn, or the credit characteristics of the Bonds may no longer be
comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest
investment grade rating) or lower may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest

1
<PAGE>
payments than is the case with higher grade bonds. Bonds rated below investment
grade or unrated bonds with similar credit characteristics are often subject to
greater market fluctuations and risk of loss of principal and income than higher
grade bonds and their value may decline precipitously in response to rising
interest rates.

Because each Defined Asset Fund is a preselected portfolio of bonds, you
know the securities, maturities, call dates and ratings before you invest. Of
course, the Portfolio will change somewhat over time, as Bonds mature, are
redeemed or are sold to meet Unit redemptions or in other limited circumstances.
Because the Portfolio is not actively managed and principal is returned as the
Bonds are disposed of, this principal should be relatively unaffected by changes
in interest rates.

BOND PORTFOLIO SUPERVISION

The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. The Fund may retain an issuer's bonds despite adverse financial
developments. Experienced financial analysts regularly review the Portfolio and
a Bond may be sold in certain circumstances including the occurrence of a
default in payment or other default on the Bond, a decline in the projected
income pledged for debt service on a revenue bond, institution of certain legal
proceedings, if the Bond becomes taxable or is otherwise inconsistent with the
Fund's investment objectives, a decline in the price of the Bond or the
occurrence of other market or credit factors (including advance refunding) that,
in the opinion of Defined Asset Funds research analysts, makes retention of the
Bond detrimental to the interests of investors. The Trustee must generally
reject any offer by an issuer of a Bond to exchange another security pursuant to
a refunding or refinancing plan.

The Sponsors and the Trustee are not liable for any default or defect in a
Bond. If a contract to purchase any Bond fails, the Sponsors may generally
deposit a replacement bond so long as it is a tax-exempt bond, has a fixed
maturity or disposition date substantially similar to the failed Bond and is
rated A or better by at least one nationally recognized rating organization or
has comparable credit characteristics. A replacement bond must be deposited
within 110 days after deposit of the failed contract, at a cost that does not
exceed the funds reserved for purchasing the failed Bond and at a yield to
maturity and current return substantially equivalent (considering then current
market conditions and relative creditworthiness) to those of the failed Bond, as
of the date the failed contract was deposited.

RISK FACTORS

An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.

Certain of the Bonds may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount bonds are lower than comparably rated bonds selling at par because
discount bonds tend to increase in market value as they approach maturity. The
current returns of market premium bonds are higher than comparably rated bonds
selling at par because premium bonds tend to decrease in market value as they
approach maturity. Because part of the purchase price is returned through
current income payments and not at maturity, an early redemption at par of a
premium bond will result in a reduction in yield to the Fund. Market premium or
discount attributable to interest rate changes does not indicate market
confidence or lack of confidence in the issue.

Certain Bonds deposited into the Fund may have been acquired on a
when-issued or delayed delivery basis. The purchase price for these Bonds is
determined prior to their delivery to the Fund and a gain or loss may result
from fluctuations in the value of the Bonds. Additionally, in any Defined Asset
Funds Municipal Series, if the value of the Bonds reserved for payment of the
periodic deferred sales charge, together with the interest thereon, were to
become insufficient to pay these charges, additional bonds would be required to
be sold.

The Fund may be concentrated in one or more of types of bonds.
Concentration in a State may involve additional risk because of the decreased
diversification of economic, political, financial and market risks. Set forth
below is a brief description of certain risks associated with bonds which may be
held by the Fund. Additional

2
<PAGE>
information is contained in the Information Supplement which is available from
the Trustee at no charge to the investor.

GENERAL OBLIGATION BONDS

Certain of the Bonds may be general obligations of a governmental entity.
General obligation bonds are backed by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. However, the
taxing power of any governmental entity may be limited by provisions of state
constitutions or laws and its credit will depend on many factors, including an
erosion of the tax base resulting from population declines, natural disasters,
declines in the state's industrial base or an inability to attract new
industries, economic limits on the ability to tax without eroding the tax base
and the extent to which the entity relies on federal or state aid, access to
capital markets or other factors beyond the entity's control. In addition,
political restrictions on the ability to tax and budgetary constraints affecting
state governmental aid may have an adverse impact on the creditworthiness of
cities, counties, school districts and other local governmental units.

As a result of the recent recession's adverse impact upon both revenues and
expenditures, as well as other factors, many state and local governments have
confronted deficits which were the most severe in recent years. Many issuers are
facing highly difficult choices about significant tax increases and spending
reductions in order to restore budgetary balance. The failure to implement these
actions on a timely basis could force these issuers to issue additional debt to
finance deficits or cash flow needs and could lead to a reduction of their bond
ratings and the value of their outstanding bonds.

MORAL OBLIGATION BONDS

The Portfolio may include 'moral obligation' bonds. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of the bonds
becomes a moral commitment but not a legal obligation of the state or local
government in question. Even though the state or local government may be called
on to restore any deficits in capital reserve funds of the agencies or
authorities which issued the bonds, any restoration generally requires
appropriation by the state or local legislature and does not constitute a
legally enforceable obligation or debt of the state or local government. The
agencies or authorities generally have no taxing power.

REFUNDED BONDS

Refunded bonds are typically secured by direct obligations of the U.S.
Government or in some cases obligations guaranteed by the U.S. Government placed
in an escrow account maintained by an independent trustee until maturity or a
predetermined redemption date. These obligations are generally noncallable prior
to maturity or the predetermined redemption date. In a few isolated instances,
however, bonds which were thought to be escrowed to maturity have been called
for redemption prior to maturity.

MUNICIPAL REVENUE BONDS

Municipal revenue bonds are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. Municipal revenue bonds
are not general obligations of governmental entities backed by their taxing
power and payment is generally solely dependent upon the creditworthiness of the
public issuer or the financed project or state appropriations. Examples of
municipal revenue bonds are:

Municipal utility bonds, including electrical, water and sewer revenue
bonds, whose payments are dependent on various factors, including the rates
the utilities may charge, the demand for their services and their operating
costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the
costs and availability of fuel and, with certain electric utilities, the
risks associated with the nuclear industry;

Lease rental bonds which are generally issued by governmental financing
authorities with no direct taxing power for the purchase of equipment or
construction of buildings that will be used by a state or local government.
Lease rental bonds are generally subject to an annual risk that the lessee
government might not appropriate funds for the leasing rental payments to
service the bonds and may also be subject to the risk that rental
obligations may terminate in the event of damage to or destruction or
condemnation of the equipment or building;

3
<PAGE>
Multi-family housing revenue bonds and single family mortgage revenue
bonds which are issued to provide financing for various housing projects
and which are payable primarily from the revenues derived from mortgage
loans to housing projects for low to moderate income families or notes
secured by mortgages on residences; repayment of this type of bonds is
therefore dependent upon, among other things, occupancy levels, rental
income, the rate of default on underlying mortgage loans, the ability of
mortgage insurers to pay claims, the continued availability of federal,
state or local housing subsidy programs, economic conditions in local
markets, construction costs, taxes, utility costs and other operating
expenses and the managerial ability of project managers. Housing bonds are
generally prepayable at any time and therefore their average life will
ordinarily be less than their stated maturities;

Hospital and health care facility bonds whose payments are dependent
upon revenues of hospitals and other health care facilities. These revenues
come from private third-party payors and government programs, including the
Medicare and Medicaid programs, which have generally undertaken cost
containment measures to limit payments to health care facilities. Hospitals
and health care facilities are subject to various legal claims by patients
and others and are adversely affected by increasing costs of insurance;

Airport, port, highway and transit authority revenue bonds which are
dependent for payment on revenues from the financed projects, including
user fees from ports and airports, tolls on turnpikes and bridges, rents
from buildings, transit fare revenues and additional financial resources
including federal and state subsidies, lease rentals paid by state or local
governments or a pledge of a special tax such as a sales tax or a property
tax. In the case of the air travel industry, airport income is largely
affected by the airlines' ability to meet their obligations under use
agreements which in turn is affected by increased competition among
airlines, excess capacity and increased fuel costs, among other factors.

Solid waste disposal bonds which are generally payable from dumping and
user fees and from revenues that may be earned by the facility on the sale
of electrical energy generated in the combustion of waste products and
which are therefore dependent upon the ability of municipalities to fully
utilize the facilities, sufficient supply of waste for disposal, economic
or population growth, the level of construction and maintenance costs, the
existence of lower-cost alternative modes of waste processing and
increasing environmental regulation. A recent decision of the U.S. Supreme
Court limiting a municipality's ability to require use of its facilities
may have an adverse affect on the credit quality of various issues of these
bonds;

Special tax bonds which are not secured by general tax revenues but are
only payable from and secured by the revenues derived by a municipality
from a particular tax--for example, a tax on the rental of a hotel room, on
the purchase of food and beverages, on the rental of automobiles or on the
consumption of liquor and may therefore be adversely affected by a
reduction in revenues resulting from a decline in the local economy or
population or a decline in the consumption, use or cost of the goods and
services that are subject to taxation;

Student loan revenue bonds which are typically secured by pledges of new
or existing student loans. The loans, in turn, are generally either
guaranteed by eligible guarantors and reinsured by the Secretary of the
U.S. Department of Education, directly insured by the federal government,
or financed as part of supplemental or alternative loan programs within a
state (e.g., loan repayments are not guaranteed). These bonds often permit
the issuer to enter into interest rate swap agreements with eligible
counterparties in which event the bonds are subject to the additional risk
of the counterparty's ability to fulfill its swap obligation;

University and college bonds, the payments on which are dependent upon
various factors, including the size and diversity of their sources of
revenues, enrollment, reputation, the availability of endowments and other
funds and, in the case of public institutions, the financial condition of
the relevant state or other governmental entity and its policies with
respect to education; and

Tax increment and tax allocation bonds, which are secured by ad valorem
taxes imposed on the incremental increase of taxable assessed valuation of
property within a jurisdiction above an established base of assessed value.
The issuers of these bonds do not have general taxing authority and the tax
assessments on which the taxes used to service the bonds are based may be
subject to devaluation due to market price declines or governmental action.

Puerto Rico. Certain Bonds may be affected by general economic conditions
in the Commonwealth of Puerto Rico. Puerto Rico's economy is largely dependent
for its development on federal programs and current federal

4
<PAGE>
budgetary policies suggest that an expansion of its programs is unlikely.
Reductions in federal tax benefits or incentives or curtailment of spending
programs could adversely affect the Puerto Rican economy.

Industrial Development Revenue Bonds. Industrial development revenue bonds
are municipal obligations issued to finance various privately operated projects
including pollution control and manufacturing facilities. Payment is generally
solely dependent upon the creditworthiness of the corporate operator of the
project and, in certain cases, an affiliated or third party guarantor and may be
affected by economic factors relating to the particular industry as well as
varying degrees of governmental regulation. In many cases industrial revenue
bonds do not have the benefit of covenants which would prevent the corporations
from engaging in capital restructurings or borrowing transactions which could
reduce their ability to meet their obligations and result in a reduction in the
value of the Portfolio.

BONDS BACKED BY LETTERS OF CREDIT OR INSURANCE

Certain Bonds may be secured by letters of credit issued by commercial
banks or savings banks, savings and loan associations and similar thrift
institutions or are direct obligations of banks or thrifts. The letter of credit
may be drawn upon, and the Bonds redeemed, if an issuer fails to pay amounts due
on the Bonds or, in certain cases, if the interest on the Bond becomes taxable.
Letters of credit are irrevocable obligations of the issuing institutions. The
profitability of a financial institution is largely dependent upon the credit
quality of its loan portfolio which, in turn, is affected by the institution's
underwriting criteria, concentrations within the portfolio and specific industry
and general economic conditions. The operating performance of financial
institutions is also impacted by changes in interest rates, the availability and
cost of funds, the intensity of competition and the degree of governmental
regulation.

Certain Bonds may be insured or guaranteed by insurance companies listed
below. The claims-paying ability of each of these companies, unless otherwise
indicated, was rated AAA by Standard & Poor's or another nationally recognized
rating organization at the time the insured Bonds were purchased by the Fund.
The ratings are subject to change at any time at the discretion of the rating
agencies. In the event that the rating of an Insured Fund is reduced, the
Sponsors are authorized to direct the Trustee to obtain other insurance on
behalf of the Fund. The insurance policies guarantee the timely payment of
principal and interest on the Bonds but do not guarantee their market value or
the value of the Units. The insurance policies generally do not provide for
accelerated payments of principal or cover redemptions resulting from events of
taxability.

The following summary information relating to the listed insurance
companies has been obtained from publicly available information:

<TABLE><CAPTION>
FINANCIAL INFORMATION
AS OF SEPTEMBER 30, 1994
(IN MILLIONS OF DOLLARS)
--------------------------------------
POLICYHOLDERS'
NAME DATE ESTABLISHED ADMITTED ASSETS SURPLUS
- ---------------------------------------------------- ----------------- --------------- ---------------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation......................... 1970 $ 2,150 $ 779
Asset Guaranty Insurance Co. (AA by S&P) 1988 152 73
Capital Guaranty Insurance Company.................. 1986 293 166
Capital Markets Assurance Corp...................... 1987 198 139
Connie Lee Insurance Company........................ 1987 193 106
Continental Casualty Company........................ 1948 19,220 3,309
Financial Guaranty Insurance Company................ 1984 2,092 872
Financial Security Assurance Inc.................... 1984 776 369
Firemen's Insurance Company of Newark, NJ........... 1855 2,236 383
Industrial Indemnity Co. (HIBI)..................... 1920 1,853 299
Municipal Bond Investors Assurance Corporation...... 1986 3,314 1,083
</TABLE>

Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation,

5
<PAGE>
controls on medical care costs, minimum standards for no-fault automobile
insurance, national health insurance, tax law changes affecting life insurance
companies and repeal of the antitrust exemption for the insurance business can
significantly impact the insurance business.

STATE RISK FACTORS

Investment in a single State Trust, as opposed to a Fund which invests in
the obligations of several states, may involve some additional risk due to the
decreased diversification of economic, political, financial and market risks. A
brief description of the factors which may affect the financial condition of the
applicable State for any State Trust, together with a summary of tax
considerations relating to that State, appear in Part A (or for certain State
Trusts, Part C), of the Prospectus; further information is contained in the
Information Supplement.

LITIGATION AND LEGISLATION

The Sponsors do not know of any pending litigation as of the initial date
of deposit which might reasonably be expected to have a material adverse effect
upon the Fund. At any time after the initial date of deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Bonds in the Fund. Litigation, for example, challenging the issuance of
pollution control revenue bonds under environmental protection statutes may
affect the validity of certain Bonds or the tax-free nature of their interest.
While the outcome of litigation of this nature can never be entirely predicted,
opinions of bond counsel are delivered on the date of issuance of each Bond to
the effect that it has been validly issued and that the interest thereon is
exempt from federal income tax. Also, certain proposals, in the form of state
legislative proposals or voter initiatives, seeking to limit real property taxes
have been introduced in various states, and an amendment to the constitution of
the State of California, providing for strict limitations on real property
taxes, has had a significant impact on the taxing powers of local governments
and on the financial condition of school districts and local governments in
California. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to make payments due on the Bonds.
Under the Federal Bankruptcy Code, for example, municipal bond issuers, as well
as any underlying corporate obligors or guarantors, may proceed to restructure
or otherwise alter the terms of their obligations.

From time to time Congress considers proposals to prospectively and
retroactively tax the interest on state and local obligations, such as the
Bonds. The Supreme Court clarified in South Carolina v. Baker (decided on April
20, 1988) that the U.S. Constitution does not prohibit Congress from passing a
nondiscriminatory tax on interest on state and local obligations. This type of
legislation, if enacted into law, could require investors to pay income tax on
interest from the Bonds and could adversely affect an investment in Units. See
Taxes.

PAYMENT OF THE BONDS AND LIFE OF THE FUND

The size and composition of the Portfolio will change over time. Most of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to optional refunding or sinking fund redemption provisions or
otherwise. In general, optional refunding redemption provisions are more likely
to be exercised when the value of a Bond is at a premium over par than when it
is at a discount from par. Some Bonds may be subject to sinking fund and
extraordinary redemption provisions which may commence early in the life of the
Fund. Additionally, the size and composition of the Fund will be affected by the
level of redemptions of Units that may occur from time to time. Principally,
this will depend upon the number of investors seeking to sell or redeem their
Units and whether or not the Sponsors are able to sell the Units acquired by
them in the secondary market. As a result, Units offered in the secondary market
may not represent the same face amount of Bonds as on the initial date of
deposit. Factors that the Sponsors will consider in determining whether or not
to sell Units acquired in the secondary market include the diversity of the
Portfolio, the size of the Fund relative to its original size, the ratio of Fund
expenses to income, the Fund's current and long-term returns, the degree to
which Units may be selling at a premium over par and the cost of maintaining a
current prospectus for the Fund. These factors may also lead the Sponsors to
seek to terminate the Fund earlier than its mandatory termination date.

FUND TERMINATION

The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Bond or upon the consent of investors holding 51% of the
Units. The Fund may also be terminated earlier by the Sponsors once the total
assets of the Fund have fallen below the minimum value specified in Part A of
the Prospectus. A decision by the Sponsors to terminate

6
<PAGE>
the Fund early will be based on factors similar to those considered by the
Sponsors in determining whether to continue the sale of Units in the secondary
market.

Notice of impending termination will be provided to investors and
thereafter units will no longer be redeemable. On or shortly before termination,
the Fund will seek to dispose of any Bonds remaining in the Portfolio although
any Bond unable to be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final disposition. A proportional
share of the expenses associated with termination, including brokerage costs in
disposing of Bonds, will be borne by investors remaining at that time. This may
have the effect of reducing the amount of proceeds those investors are to
receive in any final distribution.

LIQUIDITY

Up to 40% of the value of the Portfolio may be attributable to guarantees
or similar security provided by corporate entities. These guarantees or other
security may constitute restricted securities that cannot be sold publicly by
the Trustee without registration under the Securities Act of 1933, as amended.
The Sponsors nevertheless believe that, should a sale of the Bonds guaranteed or
secured be necessary in order to meet redemption of Units, the Trustee should be
able to consummate a sale with institutional investors.

The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.

HOW TO BUY UNITS

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.

PUBLIC OFFERING PRICE--DEFINED ASSET FUNDS MUNICIPAL SERIES

To allow Units to be priced at $1,000, the Units outstanding as of the
Evaluation Time on the Initial Date of Deposit (all of which are held by the
Sponsors) will be split (or split in reverse).

During the initial offering period for at least the first three months of
the Fund, the Public Offering Price (and the Initial Repurchase Price) is based
on the higher, offer side evaluation of the Bonds at the next Evaluation Time
after the order is received. In the secondary market (after the initial offering
period), the Public Offering Price (and the Sponsors' Repurchase Price and the
Redemption Price) is based on the lower, bid side evaluation of the Bonds.

Investors will be subject to differing types and amounts of sales charge
depending upon the timing of their purchases and redemptions of Units. A
periodic deferred sales charge will be payable quarterly through about the fifth
anniversary of the Fund from a portion of the interest on and principal of Bonds
reserved for that purpose. Commencing on the first anniversary of the Fund, the
Public Offering Price will also include an up-front sales charge applied to the
value of the Bonds in the Portfolio. Lastly, investors redeeming their Units
prior to the fourth anniversary of the Fund will be charged a contingent
deferred sales charge payable out of the redemption proceeds of their Units.
These charges may be less than you would pay to buy and hold a comparable
managed fund. A complete schedule of sales charges appears in Appendix B. The
Sponsors have received an opinion of their counsel that the deferred sales
charge described in this Prospectus is consistent with an exemptive order
received from the SEC.

Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price consists of an advance to the Trustee of an amount necessary to
provide approximately equal distributions. Upon the sale or redemption of Units,
investors will receive their proportionate share of the Trustee advance. In
addition, if a Bond is sold, redeemed or otherwise disposed of, the Fund will
periodically distribute the portion of the Trustee advance that is attributable
to the Bond to investors.

7
<PAGE>
The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.

PUBLIC OFFERING PRICE--MUNICIPAL INVESTMENT TRUST FUND

In the initial offering period, the Public Offering Price is based on the
next offer side evaluation of the Bonds, and includes a sales charge based on
the number of Units of a single Fund or Trust purchased on the same or any
preceding day by a single purchaser. See Initial Offering sales charge schedule
in Appendix C. The purchaser or his dealer must notify the Sponsors at the time
of purchase of any previous purchase to be aggregated and supply sufficient
information to permit confirmation of eligibility; acceptance of the purchase
order is subject to confirmation. Purchases of Fund Units may not be aggregated
with purchases of any other unit trust. This procedure may be amended or
terminated at any time without notice.

In the secondary market (after the initial offering period), the Public
Offering Price is based on the bid side evaluation of the Bonds, and includes a
sales charge based (a) on the number of Units of the Fund and any other Series
of Municipal Investment Trust Fund purchased in the secondary market on the same
day by a single purchaser (see Secondary Market sales charge schedule in
Appendix C) and (b) the maturities of the underlying Bonds (see Effective Sales
Charge Schedule in Appendix C). To qualify for a reduced sales charge, the
dealer must confirm that the sale is to a single purchaser or is purchased for
its own account and not for distribution. For these purposes, Units held in the
name of the purchaser's spouse or child under 21 years of age are deemed to be
purchased by a single purchaser. A trustee or other fiduciary purchasing
securities for a single trust estate or single fiduciary account is also
considered a single purchaser.

In the secondary market, the Public Offering Price is further reduced
depending on the maturities of the various Bonds in the Portfolio, by
determining a sales charge percentage for each Bond, as stated in Effective
Sales Charge in Appendix C. The sales charges so determined, multiplied by the
bid side evaluation of the Bonds, are aggregated and the total divided by the
number of Units outstanding to determine the Effective Sales Charge. On any
purchase, the Effective Sales Charge is multiplied by the applicable secondary
market sales charge percentage (depending on the number of Units purchased) in
order to determine the sales charge component of the Public Offering Price.

* * *

Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.

Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Bonds, net of Fund expenses, from the initial date of deposit to,
but not including, the settlement date for Units (less any prior distributions
of interest income to investors). Bonds deposited also carry accrued but unpaid
interest up to the initial date of deposit. To avoid having investors pay this
additional accrued interest (which earns no return) when they purchase Units,
the Trustee advances and distributes this amount to the Sponsors; it recovers
this advance from interest received on the Bonds. Because of varying interest
payment dates on the Bonds, accrued interest at any time will exceed the
interest actually received by the Fund.

EVALUATIONS

Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered tax-exempt issues have
been lower than the offer prices by as much as 3 1/2% or more of face amount in
the case of inactively traded issues and as little as 1/2 of 1% in the case of
actively traded issues, but the difference between the offer and bid prices has
averaged between 1 and 2% of face amount. Neither the Sponsors, the Trustee or
the Evaluator will be liable for errors in the Evaluator's judgment. The fees of
the Evaluator will be borne by the Fund.

8
<PAGE>
CERTIFICATES

Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.

HOW TO SELL UNITS

SPONSORS' MARKET FOR UNITS

You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the Bonds,
the sale price may be less than the cost of your Units. You should consult your
financial professional for current market prices to determine if other broker-
dealers or banks are offering higher prices for Units.

The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.

TRUSTEE'S REDEMPTION OF UNITS

You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. While Defined Asset Funds Municipal Series
have a declining deferred sales charge payable on redemption (see Appendix B),
Municipal Investment Trust Fund has no back-end load or 12b-1 fees, so there is
never a fee for cashing in your investment (see Appendix C). If they do not
purchase Units tendered, the Trustee is authorized in its discretion to sell
Units in the over-the-counter market if it believes it will obtain a higher net
price for the redeeming investor.

By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Bonds, net accrued interest, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid Fund
expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units.

For Defined Asset Funds Municipal Series, Bonds are evaluated on the offer
side during the initial offering period and for at least the first three months
of the Fund (even in the secondary market) and on the bid side thereafter. For
Municipal Investment Trust Fund, Bonds are evaluated on the offer side during
the initial offering period and on the bid side thereafter.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and will
also reduce the size and diversity of the Fund.

Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Bonds not reasonably practicable, or
for any other period permitted by the SEC.

9
<PAGE>
INCOME, DISTRIBUTIONS AND REINVESTMENT

INCOME

Some of the Bonds may have been purchased on a when-issued basis or may
have a delayed delivery. Since interest on these Bonds does not begin to accrue
until the date of their delivery to the Fund, the Trustee's annual fee and
expenses may be reduced to provide tax-exempt income to investors for this
non-accrual period. If a when-issued Bond is not delivered until later than
expected and the amount of the Trustee's annual fee and expenses is insufficient
to cover the additional accrued interest, the Sponsors will treat the contracts
as failed Bonds. The Trustee is compensated for its fee reduction by drawing on
the letter of credit deposited by the Sponsors before the settlement date for
these Bonds and depositing the proceeds in a non-interest bearing account for
the Fund.

Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.

DISTRIBUTIONS

Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
for Defined Asset Funds Municipal Series, distributions of amounts necessary to
pay the deferred portion of the sales charge will be made from the Capital and
Income Accounts to an account maintained by the Trustee for purposes of
satisfying investors' sales charge obligations.

The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses (and, for Defined Asset Funds Municipal Series, the portion
of the deferred sales charge payable from interest income) as stated in Part A
of the Prospectus, will change as Bonds mature, are called or sold or otherwise
disposed of, as replacement bonds are deposited and as Fund expenses change.
Because the Portfolio is not actively managed, income distributions will
generally not be affected by changes in interest rates. Depending on the
financial conditions of the issuers of the Bonds, the amount of income should be
substantially maintained as long as the Portfolio remains unchanged; however,
optional bond redemptions or other Portfolio changes may occur more frequently
when interest rates decline, which would result in early returns of principal
and possibly earlier termination of the Fund.

REINVESTMENT

Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in the Municipal Fund Accumulation
Program, Inc. The Program is an open-end management investment company whose
investment objective is to obtain income exempt from regular federal income
taxes by investing in a diversified portfolio of state, municipal and public
authority bonds rated A or better or with comparable credit characteristics.
Reinvesting compounds earnings free from federal tax. Investors participating in
the Program will be subject to state and local income taxes to the same extent
as if the distributions had been received in cash, and most of the income on the
Program is subject to state and local income taxes. For more complete
information about the Program, including charges and expenses, request the
Program's prospectus from the Trustee. Read it carefully before you decide to
participate. Written notice of election to participate must be received by the
Trustee at least ten days before the Record Day for the first distribution to
which the election is to apply.

FUND EXPENSES

Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for extraordinary
services, costs of indemnifying the Trustee and the Sponsors, costs of

10
<PAGE>
action taken to protect the Fund and other legal fees and expenses, Fund
termination expenses and any governmental charges. The Trustee has a lien on
Fund assets to secure reimbursement of these amounts and may sell Bonds for this
purpose if cash is not available. The Sponsors receive an annual fee of a
maximum of $0.35 per $1,000 face amount to reimburse them for the cost of
providing Portfolio supervisory services to the Fund. While the fee may exceed
their costs of providing these services to the Fund, the total supervision fees
from all Defined Asset Funds Municipal Series will not exceed their costs for
these services to all of those Series during any calendar year; and the total
supervision fees from all Series of Municipal Investment Trust Fund will not
exceed their costs for these services to all of those Series during any calendar
year. The Sponsors may also be reimbursed for their costs of providing
bookkeeping and administrative services to the Fund, currently estimated at
$0.10 per Unit. The Trustee's, Sponsors' and Evaluator's fees may be adjusted
for inflation without investors' approval.

All expenses in establishing the Fund will be paid from the Underwriting
Account at no charge to the Fund. Sales charges on Defined Asset Funds range
from under 1.0% to 5.5%. This may be less than you might pay to buy and hold a
comparable managed fund. Defined Asset Funds can be a cost-effective way to
purchase and hold investments. Annual operating expenses are generally lower
than for managed funds. Because Defined Asset Funds have no management fees,
limited transaction costs and no ongoing marketing expenses, operating expenses
are generally less than 0.25% a year. When compounded annually, small
differences in expense ratios can make a big difference in your investment
results.

TAXES

The following discussion addresses only the U.S. federal and certain New
York State and City income tax consequences under current law of Units held as
capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies or other investors with
special circumstances.

In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:

The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Bond in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Internal Revenue Code'). Each investor will be considered to have received
the interest and accrued the original issue discount, if any, on his pro
rata portion of each Bond when interest on the Bond is received or original
issue discount is accrued by the Fund. The investor's basis in his Units
will be equal to the cost of his Units, including any up-front sales
charge.

When an investor pays for accrued interest, the investor's confirmation
of purchase will report to him the amount of accrued interest for which he
paid. These investors will receive the accrued interest amount as part of
their first monthly distribution. Accordingly, these investors should
reduce their tax basis by the accrued interest amount after the first
monthly distribution.

An investor will recognize taxable gain or loss when all or part of his
pro rata portion of a Bond is disposed of by the Fund. An investor will
also be considered to have disposed of all or a portion of his pro rata
portion of each Bond when he sells or redeems all or some of his Units. An
investor who is treated as having acquired his pro rata portion of a Bond
at a premium will be required to amortize the premium over the term of the
Bond. The amortization is only a reduction of basis for the investor's pro
rata portion of the Bond and does not result in any deduction against the
investor's income. Therefore, under some circumstances, an investor may
recognize taxable gain when his pro rata portion of a Bond is disposed of
for an amount equal to or less than his original tax basis therefor.

Under Section 265 of the Internal Revenue Code, a non-corporate investor
is not entitled to a deduction for his pro rata share of fees and expenses
of the Fund, because the fees and expenses are incurred in connection with
the production of tax-exempt income. Further, if borrowed funds are used by
an investor to purchase or carry Units of the Fund, interest on this
indebtedness will not be deductible for federal income tax purposes. In
addition, under rules used by the Internal Revenue Service, the purchase of
Units may be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to the purchase of Units.

Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as the income of the investors in the same manner as for
federal income tax purposes, but will not necessarily be tax-exempt.

11
<PAGE>
The foregoing discussion relates only to U.S. federal and certain
aspects of New York State and City income taxes. Depending on their state
of residence, investors may be subject to state and local taxation and
should consult their own tax advisers in this regard.

* * *

In the opinion of bond counsel rendered on the date of issuance of each
Bond, the interest on each Bond is excludable from gross income under existing
law for regular federal income tax purposes (except in certain circumstances
depending on the investor) but may be subject to state and local taxes, and
interest on some or all of the Bonds may become subject to regular federal
income tax, perhaps retroactively to their date of issuance, as a result of
changes in federal law or as a result of the failure of issuers (or other users
of the proceeds of the Bonds) to comply with certain ongoing requirements. If
the interest on a Bond should be determined to be taxable, the Bond would
generally have to be sold at a substantial discount. In addition, investors
could be required to pay income tax on interest received prior to the date on
which the interest is determined to be taxable.

Neither the Sponsors nor Davis Polk & Wardwell have made or will make any
review of the proceedings relating to the issuance of the Bonds or the basis for
these opinions and there can be no assurance that the issuer (and other users)
will comply with any ongoing requirements necessary for a Bond to maintain its
tax-exempt character.

RECORDS AND REPORTS

The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.

With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Bonds in exchange or substitution for Bonds (or contracts) previously deposited,
the Trustee will send a notice to each investor, identifying both the Bonds
removed and the replacement bonds deposited. The Trustee sends each investor of
record an annual report summarizing transactions in the Fund's accounts and
amounts distributed during the year and Bonds held, the number of Units
outstanding and the Redemption Price at year end, the interest received by the
Fund on the Bonds, the gross proceeds received by the Fund from the disposition
of any Bond (resulting from redemption or payment at maturity or sale of any
Bond), and the fees and expenses paid by the Fund, among other matters. The
Trustee will also furnish annual information returns to each investor and to the
Internal Revenue Service. Investors are required to report to the Internal
Revenue Service the amount of tax-exempt interest received during the year.
Investors may obtain copies of Bond evaluations from the Trustee to enable them
to comply with federal and state tax reporting requirements. Fund accounts are
audited annually by independent accountants selected by the Sponsors. Audited
financial statements are available from the Trustee on request.

TRUST INDENTURE

The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.

The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.

The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within

12
<PAGE>
30 days after notification, the resigning Trustee or Evaluator may apply to a
court of competent jurisdiction to appoint a successor.

Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains and is agreeable to the resignation. A new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the duties of the
resigning Sponsor. If there is only one Sponsor and it fails to perform its
duties or becomes incapable of acting or bankrupt or its affairs are taken over
by public authorities, the Trustee may appoint a successor Sponsor at reasonable
rates of compensation, terminate the Indenture and liquidate the Fund or
continue to act as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been appointed as Agent for the Sponsors by the other
Sponsors.

The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.

MISCELLANEOUS

LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.

AUDITORS

The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.

TRUSTEE

The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.